Can lawyers own an outside business such as a collection agency while practicing law, and can their firm accept referrals from that business?
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This page answers the general question as of 1982. Ezel answers yours: whether it's allowed on your facts, under the current rules of professional conduct in your state, with citations.
Plain-English summary
Opinion E-82-11 addressed two practicing attorneys who owned 100 percent of a licensed collection agency. The agency was housed separately from the law office, with separate phones, listings, and day-to-day management, but the firm received a large number of referrals from the agency. The committee was asked whether the arrangement was proper.
The committee found no disciplinary rule, under either the ABA Code of Professional Responsibility or the Wisconsin Supreme Court Rules, that prohibits a lawyer from engaging in another business simultaneously with the practice of law. It reviewed the history of the "indirect solicitation" and "feeder practice" objections to dual practice, noting those concepts were dropped from the ABA Code in 1969 as overly broad and vague, and that DR 2-102(E) was deleted in 1980 after Bates v. State Bar of Arizona, 433 U.S. 350 (1977). Relying on ABA Formal Opinion 328, the committee said that if a second occupation is so law-related that the lawyer's work in it inseparably involves the practice of law, the lawyer is bound by the Code as to both occupations.
The committee concluded that owning the collection agency is not prohibited by any disciplinary rule, but acceptance of referrals is governed by the existing solicitation and barratry rules (SCR 20.09(1) and 20.10; Wis. Stat. sec. 757.295) and may quite often result in a violation of the solicitation prohibitions. It also noted that Wisconsin retains the restriction of SCR 20.08(5) (former DR 2-102(E)) on holding out a dual practice, which has not been abolished in the state. The committee overruled prior State Bar Opinion E-60-1 to the extent it was inconsistent with ABA Formal Opinion 328.
Currency note
This opinion was issued in 1982, before Wisconsin's July 1, 2007 adoption of the revised Rules of Professional Conduct for Attorneys (the state's Ethics 2000 update), and it applies the former Code and pre-2007 Supreme Court Rules cited in the opinion. Outside (law-related) businesses are now addressed by SCR 20:5.7 / Model Rule 5.7, with solicitation and advertising under SCR 20:7.2 and 20:7.3 / Model Rules 7.2 and 7.3. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.
Common questions
Q: Could the two lawyers own a collection agency at all?
A: Yes. The committee found no disciplinary rule prohibiting a lawyer from engaging in another business at the same time as practicing law, so ownership of the agency was not prohibited per se.
Q: Could the firm freely take referrals from its own collection agency?
A: Not freely. The committee said acceptance of referrals is governed by the solicitation and barratry rules and may quite often result in a violation, because a referral from the lawyers' own agency can be tantamount to the lawyers recommending their own employment.
Q: What happened to the earlier "feeder practice" rule?
A: The committee explained that the indirect-solicitation and feeder-practice concepts were dropped from the ABA Code in 1969, and it overruled the older State Bar Opinion E-60-1 to the extent it conflicted with ABA Formal Opinion 328.
Background and rules framework
The opinion interpreted the former Wisconsin Supreme Court Rules on holding out a dual practice and on solicitation (SCR 20.08(5), 20.09(1), 20.10), the corresponding ABA Code provisions (DR 2-102(E), DR 2-103(A), DR 2-104(A)), and the state barratry statute (Wis. Stat. sec. 757.295), guided by ABA Formal Opinion 328. The current counterparts are the law-related-services rule (SCR 20:5.7 / Model Rule 5.7) and the advertising and solicitation rules (SCR 20:7.2, 20:7.3 / Model Rules 7.2, 7.3).
Citations and references
Rules of Professional Conduct:
- Wis. SCR 20.08(5) (former DR 2-102(E)) (holding out a dual practice)
- Wis. SCR 20.09(1), 20.10 (former DR 2-103(A), DR 2-104(A)) (solicitation)
- Model Rules 5.7, 7.2, 7.3 (law-related services; advertising; solicitation)
Statutes:
- Wis. Stat. sec. 757.295 (barratry)
Cases:
- Bates v. State Bar of Arizona, 433 U.S. 350 (1977), liberalization of lawyer advertising
Other opinions cited:
- ABA Formal Opinion 328: the dual practitioner and law-related occupations
- State Bar Opinion E-60-1: overruled to the extent inconsistent with ABA Formal Opinion 328
See also
- WI Ethics Op. E-83-14: Dual Practice in a Service Organization and Law Office
- WI Ethics Op. E-84-21: Lawyer in an Interdisciplinary Financial Planning Organization
- WI Ethics Op. E-87-7: For-Profit Lawyer Referral Services
Source
- Landing page: https://www.wisbar.org/formembers/ethics/pages/formal-opinions.aspx
- Original PDF: https://www.wisbar.org/formembers/ethics/Ethics%20Opinions/E-82-11.pdf
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